|It was 4 a.m. and I couldnít sleep. Iíd been lying in bed, tossing, turning and thinking about a phone call I got from a trusted friend the previous night right after dinner. He had told me about a meeting he had been to where a farmer was complaining about the proposed Indiana corn checkoff, which is being debated in the Indiana Senate right now.
I always try to look at all issues from both sides, but for the life of me, all night long I was lying in my bed trying to think of why an Indiana farmer wouldnít be in favor of higher corn prices.
I have been on the road or in an airplane almost constantly since the first of the year going to meetings, in Phoenix, Nashville, Tucson, Washington, D.C. But most importantly, Iíve been driving all around Indiana to farm bill listening sessions doing one thing: Trying to figure out how to raise the price of corn and improve net farm income.
Common themes Iíve heard everywhere are:
ēMy anhydrous ammonia fertilizer costs more than $550 a ton.
ēMy fuel costs have doubled since 2004.
ēMy health care costs are up 23 percent, and my wife had to take a job in town, and I may have to get a job in town, too.
ēThe politicians in Washington, D.C., tell me we have a budget crisis and they are going to cut our farm payments.
ēI need to expand my farm but cash rents and land prices are too high plus my urban neighbors would throw a fit if I put in one of those new hog units. I would like to bring my son/daughter back home.
The list could go on and on. My heart aches as I listen, and as a farmer myself, I can tell you that unfortunately most of these concerns are true for our operation as well. I hear and feel the pain. Soon I will be heading to the field to plant a crop on which the profit margin could be breakeven at best. My farm management training says we can only do three things to increase our profits. We can: (1) Decrease costs; (2) Increase volume or (3) Increase prices.
That sounds pretty basic - except that Iíve been working on the cost side forever. We are no-tilling to save fuel, labor and machinery costs. We are prepaying and buying when discounts are available. We are applying seed, chemicals and fertilizer at variable rates depending on the soil types in a particular field. We are applying inputs of precise amounts only where they are needed. We are planting hybrids that dry down in the field so we can reduce drying costs in the fall. I could go on and on, but we have all been doing everything we can to minimize costs. Iíve about run out of places to cut.
Increase volume, well, thatís a hard one. Yes, we are doing everything we know possible to increase yields, but I must admit Mother Nature and the good Lord above have more to say about this one than I do. With two pretty good crop years in a row, Iím sure not budgeting for a third.
Increase prices - you may be laughing when I mention this one. We do everything we can to do a better job of marketing our crop.
Actually Iíve given up on my own skills and have hired a marketing advisor. Yes, we cash contract ahead; yes, we use futures and options markets; yes, we try to maximize our LDPs and reward basis gains. Yes, we haul our corn to terminal or processor markets where we get higher prices. But with markets the way they are now, itís hard to squeeze out a profit. Corn selling at below $2 per bushel doesnít pay the bills.
So why does one farmerís opposition to the corn checkoff keep me awake? I guess because I see it as my LAST CHANCE to increase the price of corn. I see other states that have been building ethanol plants for years. Why? Because the farmers there had checkoff funds to push ethanol and biofuels. Iíve seen Illinois farmers at gas stations passing out checkoff-funded information on E-85 and educating consumers about flex-fuel vehicles. Iíve seen them actually pumping ethanol into cars and trucks saying, ďTry some.Ē
States with checkoffs have funded research to get more ethanol from a bushel of corn; they have funded research to try to find more efficient enzymes to reduce costs and make the cost of ethanol competitive with that of gas.
How many of you drive flex-fuel vehicles or even know if you have one? Yet 20 percent of all new cars are flex-fuel and we donít even know it in Indiana, while in other states, farmer-directed checkoff boards have put up billboards and newspaper ads educating drivers about this new industry.
Iíve read about efforts in Iowa and Minnesota to help gas stations put in E-85 tanks. Ethanol production in Iowa one month last year exceeded exports. With corn production in Argentina and Brazil getting larger every year, do you see exports increasing?
Corn prices increase 15-20 cents a bushel around ethanol plants, but more importantly they increase prices for everyone.
Without ethanol where would prices be with an 11-billion bushel corn crop? Seems to me yields are going up every year, and soon we will be facing a 12-billion bushel crop.
I think dumping ethanol in every car in America as a renewable fuel is the best way to get rid of it. But it wonít happen here in Indiana unless we get on board. We need checkoff research dollars to find ways to turn the dried distillers grain, or DDGs, into cheap hog and poultry feed.
We are almost there but we need research dollars to find additional answers. DDGs are already a great dairy and beef cattle feed.
Donít forget we can also use those checkoff dollars to do research to find ways to reduce nitrogen and other input costs too.
But it wonít happen here in Indiana unless you make one phone call. The corn checkoff legislation that is being considered in the Senate needs your help.
Senators are hearing from the naysayers, those who donít want a future in agriculture, those who wonít invest in their future and are willing to see ethanol plants being built in other states.
OK, Iíve learned you canít convince everybody, but whatís great about this proposed checkoff is that you can request your money back. For those who donít believe what Iíve written, let the rest of us who do believe raise the dollars needed.
Thirty percent of the new fund would be mandated to be spent on ethanol efforts. But I know the corn marketing council sees a higher need than that and will use our dollars wisely to ďINCREASE THE PRICE OF CORN.Ē
Your call will and can make the difference. I ask you to please call your state senators at 1-800-382-9467.
Ask them for two things: to support the corn checkoff bill, but more importantly, to urge Senator Johnny Nugent to give the bill a hearing.
President, Indiana Farm Bureau
This farm news was published in the March 1, 2006 issue of Farm World.